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RICHARD QUEST, HOST: The good ship QE3 sails forth as the Fed launches a third round of bond-buying. Ben Bernanke speaks live in this hour.

More integration, more democracy, more Europe. Tonight, European Commission president Jose Manuel Barroso on why there's no going back.

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JOSE MANUEL BARROSO, PRESIDENT, EUROPEAN COMMISSION: Now it's quite obvious that to sustain a common currency you need more common power, we need more sharing of the sovereignty of member states.

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QUEST: And definitely up in the air. Doubts emerge over that tie-up in the defense sector with BAE Systems.

I'm Richard Quest. I mean business.

Good evening. The US Federal Reserve has revealed the policy trident that it's going to use to spur on economic growth. Much as expected, there is to be a third round of quantitative easing. It's all part of the plan.

The Fed is to buy $40 billion worth of mortgage-backed securities each month. And the important thing to note here, is it's monthly There's no upper limit. This will continue, $40 billion a month.

Operation Twist, which was started earlier in mid of this year, will continue until the end of the year. That replaces short-term debt with long-term debt.

And also, the Fed continues reinvesting its maturing bonds and investing into ABSs. The total amount of money is $85 billion, $85 billion a month will be going to -- added to the Fed's balance sheet. Interest rates will be held at exceptionally low levels until at least the middle of 2015.

Now, in the next ten minutes, or in about ten minutes, we will be hearing from the Fed chairman Ben Bernanke, and we'll bring you his comments as soon as that happens.

The market -- US stocks had an instant reaction to the -- look at that! About two hours ago, I would say it was unchanged. Up a bit, down a bit, moving a bit. Very little movement.

But as soon as Ben Bernanke -- as soon as the decision came out, we went up -- well, you can see. Look at this. Come right in. That's worth having a close look at. You don't see that every day. The market's up one and a quarter points, 13,502, the highest level for some five years, and it's all on the back of QE3, Twist, and reinvest. Stocks were flat just before that.

Let's join Ali Velshi, who is in New York. Ali, QE3, Twist -- but the thing that struck me, it's open-ended, this $40 billion.

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Yes. That was my first question. When a producer and I were looking over this, and I said, when does it expire, what's the end date? And they -- it says, they didn't give an end date.

They're going to put $40 billion a month into the economy by buying mortgage-backed securities with no end date, the idea being they have a mandate of seeing growth and unemployment -- and if they don't see movement, they'll keep putting money in.

Interesting. You know what it -- you know what my complaint is, Richard?

QUEST: Go on.

VELSHI: Is that it eliminates the requirement for the policymakers in the United States to actually do the right thing.

QUEST: But as he said in Jackson Hole, the labor market is of grave concern at the moment.

VELSHI: Sure.

QUEST: Stresses in financial markets. He had to do something.

VELSHI: Well, yes. He had to do something because markets were expecting him to do something, or he had to do something because Washington wouldn't do anything. Look. The Fed is important, you and I share the view that central banks are crucial to these economies and their recoveries.

It is unusual, though, to have this big a program. I must say, I often call these things with relative accuracy. I wasn't even close on this one.

QUEST: Right.

VELSHI: I thought they would come in and say they'll keep that Operation Twist going, changing short-term into long-term maturities, they'll keep interest rates low for a little longer into 2015. This surprised me. $40 billion a month without an end date.

QUEST: All right. We'll talk more about it. I actually thought that they would tie their future purchases to some form of economic data as it - -

VELSHI: Unemployment rate or something like that.

QUEST: -- whatever, or some date. Anyway, Ali --

VELSHI: Yes.

QUEST: -- please get ready. Polish your pencil.

VELSHI: Yes.

QUEST: So to speak for Ali Velshi -- no, for Ben Bernanke, who we'll be hearing from in about ten minutes from now. Ali will be back with me for that.

VELSHI: Thanks.

QUEST: European stock markets closed before we heard from the Fed. It was a mixed session. The Paris CAC 40 was firmly in the red, dragged down by EADS, off more than 10 percent --

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QUEST: -- ten percent! We'll talk about that in a moment. Banking stocks pushed down the DAX.

Germany's president has signed Europe's permanent bailout fund into German law, and because Germany is such a big member of the ESM, it's cleared the major and last hurdle for the fiscal pact and an integrated EU.

The European Commission president, Jose Manuel Barroso, used his state of the union speech to trumpet a new federal Europe. Speaking to me earlier from Brussels, he reiterated political union is unavoidable. I asked the president, is this new federation coming sooner rather than later?

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BARROSO: The reality is that decisions are all -- all of them for more integration. We have already in some areas a federal system. We have an independent federal bank. It's the European Central Bank.

We have just now cleared the way for establishing the European Stability Mechanism that has a capital that is comparable to the IMF, so it's the European IMF we have now.

So, indeed, I believe this federation, it's unavoidable if we want to keep a single currency. Because ultimately, a single currency depends on the solidity, on the credibility of the institutions and the political construct behind it. So, I believe it's going to happen.

QUEST: Why should European citizens give the euro institutions and the whole scheme one jot more power or influence, when by your own admission, until now, they have not performed as well as they should have done in these crises? Surely --

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BARROSO: Because the --

QUEST: Surely the onus is on you and President Rompuy and Catherine Acton and others to prove that more should be given to Europe.

BARROSO: It is not to be given to me or to the institution in Brussels. It's to be given to us collectively. It's a shared sovereignty. It's not a transfer of power from the capitals.

And this is important to understand why, because the citizens of Europe are now paying very, very heavy bills because precisely we don't have that. Because the banks are transnational, but the supervision until now was purely national. That is why this financial crisis is changing dramatically perceptions.

Now it's quite obvious that to sustain a common currency, we need more common power. We need more sharing of the sovereignty of member states.

And this is not done at the detriment of our nation states. On the contrary, it's the only way for those nation states in the 21st century to count in the global world.

Because it's quite obvious that even the biggest countries in Europe alone, if they are on their own, they will not have the leverage to deal with these issues globally, with our American friends or with the giants of power, like China and others that are emerging.

QUEST: But except 15 years after EMU first came along, Maastricht and the single currency, 15 or 10 years, however long you want to say, you talk about responses of not yet convinced citizens or international -- partners. Surely the point is the onus is on the EU institutions to prove why they need more, not the other way around.

BAROSSO: European institutions and the governments and the member states. I insist on this. I was in the national government of my country 12 years. I was prime minister. We are not making European Union against the countries.

What we are saying is that in some areas, like the common currency, like the supervision of the banks, like the common --

QUEST: Right.

BARROSO: -- the supervision of the budgets, we need this sharing of sovereignty. That makes sense, and I believe that if there is leadership, this is going to happen. And indeed, some of the countries are already saying it.

QUEST: I think we can agree, though, can't we, Mr. President, that whichever way this goes, these eurozone, the European Union, it's at a turning point? That one way or the other, I mean, the blood on the financial markets and the mess that we're coming out of, some say, requires drastic change.

BAROSSO: Exactly. This is a defining moment, as I said, and I hope that, of course, the decision and until now I think I'm confirming this is not to go backwards, not disintegration or fragmentation, but indeed more integration, because globalization requires unity and unity requires integration.

And for integration we need more democracy. That is I mention the need of every democratic federation of nation states.

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QUEST: That is Jose Manuel Barroso, a vigorous debate and discussion. We'll talk more about with him later on in Greece.

I'm just looking at the projections that have just been released. They are the projections from the FOMC board, in which they -- remember, they now give their projections. Most say the appropriate timing for interest rates going up in the US is 2015, federal funds going up in 2015.

We'll hear justification in a moment as we look closer at quantitative easing 3. Ben Bernanke is expected to tell us more. If you look in Washington, we're waiting for him to join the press conference. It'll happen probably in two minutes from now, and we'll be there.

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QUEST: Yesterday was all eurozone, ESM. Today, it's all FOMC and Fed. We're moments away from the Fed chairman, Ben Bernanke, who'll be taking questions on the decision to introduce QE3, which seems to, our understanding, to be unlimited, $40 billion in new money every month into mortgage-backed securities.

Alison Kosik has been watching the reaction on Wall Street. Bernanke -- Chairman Bernanke's coming out, Alison. Bear with me. We're just going to hear the start of what he has to say, and we'll join you back again. Let's listen in to the Fed chairman if we may.

BEN BERNANKE, CHAIRMAN, US FEDERAL RESERVE: Good afternoon. Earlier today, the Federal Open Market Committee approved new measures to support the recovery and employment growth. I'll get to the specifics of our actions in a few moments, but I'd first describe the economic conditions that motivated the committee's decision to take additional actions.

As you know, the Federal Reserve conducts monetary policy under a dual mandate from Congress to promote maximum employment and price stability. The United States has enjoyed broad price stability since the mid-1990s and continues to do so today.

The employment situation, however, remains a grave concern. While the economy appears to be on a path of moderate recovery, it isn't growing fast enough to make significant progress reducing the unemployment rate.

Fewer than half of the 8 million jobs lost in the recession have been restored, and at 8.1 percent, the unemployment rate is nearly unchanged since the beginning of the year and is well above normal levels.

The weak job market should concern every American. High unemployment imposes hardship on millions of people, and it entails a tremendous waste of human skills and talents. Five million Americans have been unemployed for more than six months, and millions more have left the labor force, many of them doubtless because they've given up on finding suitable work.

As the skills of the long-term unemployed atrophy and as their connections to the labor market wither, they may find it increasingly difficult to get good jobs, to their and their families' cost, of course, but also to the detriment of our nation's productive potential.

To help bolster the recovery and promote price stability, the FOMC has provided unprecedented levels of policy accommodation in recent years.

With our main policy interest rate near its effective lower bound, we've been using two complementary tools to carry out monetary policy: balance sheet actions and forward guidance regarding how long we anticipate maintaining exceptional levels of policy accommodation.

While providing the support, we've been prudent, carefully weighing the potential benefits and costs of each new policy action and recognizing that monetary policy, particularly in the current circumstances, cannot cure all economic ills.

The FOMC has taken several actions this year. In January --

QUEST: Ben Bernanke speaking, and he will continue to speak, and we will continue to monitor. But what you really heard from Bernanke just then is the reason, the rationale, the philosophy for why they have launched QE3.

The "grave concern" that he referred to in his Jackson Hole speech just a couple of weeks ago over the stagnation in US unemployment, where the rate is 8.1 percent, which frankly, towards the 11 percent in the eurozone, seems to be almost a holiday.

Let's join Alison Kosik at the moment. What I was struck then, Alison -- first of all, tell me about the markets, but was I was struck for, he's really grabbed this nettle, and he's made no bones about it.

ALISON KOSIK, CNN CORRESPONDENT: Oh, exactly. One trader I talked to, Richard, called this the big bazooka, because if you factor in Operation twist, this really is, according to this trader, a big deal.

And the market sees that. You can see that on the board, the Dow is up 184 points. The Dow up at 13,517. You know this, the market's been expecting this to happen. It's been expecting it to happen since June. It's been stopped up since then, and stocks are going higher.

Just to give you an idea, bank shares right now, Richard, anywhere -- up anywhere between 2 and 4 percent. Home builders -- this does involve mortgage-backed securities -- home builders are up 3 to 5 percent. And got to mention Apple. Apple shares right now are at an all-time high. The market is rallying, to say the least.

QUEST: All right, but -- this is the Fed -- I mean, the Fed's propping up the market here, isn't it? It's -- the Fed's been --

KOSIK: Right. It is, it is.

QUEST: And again, he referred to that. That's one of the things he wants to do.

KOSIK: It is. And there are two schools of thought, even here on Wall Street, that now that the training wheels are back on, some of the long-term investors, they didn't want the training wheels back on, even those Wall Streeters that invest in the market. They want the Fed to be hands off. Let the economy work through this on its own.

But the short-term investors, they were banking on this. They were hoping for it. They wanted those training wheels, and they certainly got them, Richard.

QUEST: All right. So, Alison, we're up at 13,500. We've got a gain of 1.5 percent or so. And there's no -- as I -- I was talking to Ali Velshi, there's no indication of how long this thing goes on, this purchase, is there? He hasn't -- not that I can see -- it's not been tied to any economic data, to any deadline, to any mandate.

KOSIK: Right. Exactly. And that's also why you're seeing such a strong reaction in the market, because Richard, this could go on and on and on until the job market shows some signs of improvement.

As you said, this job market here in the US, it's stagnant. It is stuck in the mud. Now, the Fed is hoping that this new -- this new program is going to help things. The critics are saying -- they're skeptical. They're saying it won't.

KOSIK: -- interest rates are already at historic lows. What is this going to do? You really need demand, and demand, confidence is just not there, Richard.

QUEST: Alison Kosik in New York. The moment there's more to report, come back to us, Alison, for us this evening.

Now the Currency Conundrum for you. So, the US Treasury will replace damaged currency free of charge, or the mint will, anyway, the Bureau of Engraving. What is the value of the cash it replaces every year? Is it $10 million, $30 million, $100 million? We'll have the answer for you later in the program.

The dollar has slipped on the currencies following the Fed's announcement. These are the rates --

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QUEST: -- and this is the break.

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QUEST: It was leaked, and now doubt and skepticism surrounds the merger talks between BAE Systems and EADS tonight. Investors seemed pretty keen on the deal when it was announced. Tonight, they're not so sure.

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QUEST: BAE Systems, down more than 7 percent. EADS fared even worse in a second day of losses for the aerospace giant. Investors are on the market asking what they're going to gain. Both firms have long, tangled histories. Jim Boulden is at the CNN super screen for us tonight. This is -- something else.

JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: It is something else, and it's also kind of complicated when you look at the history of these companies. So, let's look at the family tree of this potential European powerhouse.

We'll start EADS. Now, EADS was founded in 2000 with the merger of Aerospatiale, MATRA, DASA, and CASA. This, of course, brought together Spain, Germany, and French, and with all their histories. You might remember Aerospatiale came together with Aerospatiale and MATRA. And of course, DASA is Daimler-Benz.

So, this was a real nice mixture of these aviation and manufacturing companies. For hundreds of -- for a hundred years, Aerospatiale used to be Sud Aviation, Nord Aviation, and SEREB. And that merged in 1970, all coming down to EADS in 2000.

Now, British Aerospace was, of course, merged with Marconi in 1999, and that created what we have today, BAE Systems, based here in the UK. This also, of course, has a very long history. The old British Aircraft Corporation merging with Hawker Siddeley and the old Scottish Aviation back in the 1970s.

And then, of course, you had -- let's bring it up again -- you had the Marconi name, which is quite interesting. A good history of Marconi, all GEC Defense became part of Marconi. They merged, making BAE Systems.

The question, Richard, of course, is what are we going to call these two companies if, in fact, they do come together.

QUEST: But you haven't told the whole story.

BOULDEN: OK.

QUEST: Because what you haven't reminded us about, which is why I find this all particularly fascinating, is that BAE, when it used to be British Aerospace, actually had a share in Airbus, which of course, it got rid of when EADS was formed.

BOULDEN: Yes. They used to make the wings, of course, for EADS, for the Airbus. But also remember, you had BAE Systems --

QUEST: Hang on --

BOULDEN: -- talking --

QUEST: Go on.

BOULDEN: OK. You had BAE Systems talking to DASA about a merger. When that fell apart, that's when they created EADS. It's very, very, very complicated. The point, of course, is Europe could come down to having one giant defense aerospace company that rivals Boeing.

QUEST: It could, but will it? The international perspective on the European merger. Steven Grundman is principal at Grundman Advisory. He's also an ex-Pentagon official who deals with industrial affairs.

We did have him there, and we will return to him, but for some reason -- maybe something in the gremlins got in the way. After the break, the uncertainty in Athens, our focus on the Future of Europe after the break.

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QUEST: Hello, I'm Richard Quest. More QUEST MEANS BUSINESS in a moment. First, this is CNN, and on this network, the news always comes first.

Protesters who attacked the US consulate in Benghazi, Libya, have been arrested, according to Reuters, which is quoting Libya's deputy interior minister. Evidence is reportedly being gathered in connection with the attack, which led to the deaths of four Americans, including the US ambassador. The US State Department says security in the consulate was "appropriate for what we knew."

Hundreds of angry protesters are clashing with police in Cairo. These are live pictures from the Egyptian capital. Egyptian TV reports at least 224 people have been hurt. Police are using teargas to keep the demonstrators back from the US embassy. The protestors are furious over an amateur video that demeans Islam.

Yemen's president has apologized to the US president after hundreds of protesters breached the security wall at the American embassy in Sanaa. They also stomped on nearby cars and burned the US flag. The Yemeni Defense Ministry says 24 members of its security forces were wounded in the clashes. We're told the embassy staff are all OK.

A French prosecutor and investigating judge are in Britain right now to seek new leads in the brutal murder of four people last week in the French Alps. British police helped French investigators search the homes of two victims in Surrey. Investigators are taking a closer look at Saeed Al Hilli's job, links to his native Iraq, and the reportedly dispute with the family over money.

To the merger between BAE Systems and EADS and the international perspective. Steven Grundman is the principal of Grundman Advisory. He's also an ex-Pentagon official who dealt with industrial affairs. He joins me from Washington.

Mr. Grundman, OK. BAE Systems, well and truly entrenched in the U.S. Is it your gut feeling that the U.S. doesn't want -- or won't want this merger to go ahead?

STEVEN GRUNDMAN, PRINCIPAL, GRUNDMAN ADVISORY: No, by no means. I think, you know, for the Atlantic community, if I can bring it all the way up to the international level, I think this is a terrific thing. And it would be received that way by those parts of the American community.

Look, there will be a whole reconsideration of the security regime around the BAE Systems assets here. But I would hardly suggest that that can't get done.

QUEST: OK. What do you think the U.S. is going to require to give its approval to the deal?

GRUNDMAN: Well, I think you first have to remember that the BAE Systems assets already are owned by foreign entities. And so all of the security control features in -- when a foreign owner acquires U.S. assets that has national security significance to them, all those features are already in place, albeit with respect to British ownership.

So I think they're going to look closely at how the actual structure of ownership and in particular the government shares and the ownership of the combined entity turnout and whether, in particular, governments, even the British government, for that matter, have any operational control over assets that are important to the U.S. national security.

QUEST: Right.

GRUNDMAN: This is a normal course of the review.

(CROSSTALK)

QUEST: But there's a difference, isn't there, frankly, between sort of friendly neighborhood Britain, where the relationship is as close as it's possible to be on defense matters, and say, for example, the Americans thinking that maybe there could be technology transfers to France or Germany or other countries.

GRUNDMAN: I think that there is a difference. I think when you get down to the details of how an industrial security regime are implemented, those differences become less relevant.

You know, there is already a pretty impressive ring fence, to use the party's own term, around the BAE Systems assets in the United States, and so I don't find the distinction between British and French or German ownership to be as insuperable a problem as perhaps it's presumed to be.

QUEST: Gut feeling, finally, Mr. Grundman, is this -- is this deal going to take place?

GRUNDMAN: Yes, I do. I think it'll take place. I think it's going to take a long time -- two quarters, probably -- to work through the regulatory proceedings, both here and in Europe. But I think, in the end, this is a smart deal for the companies and a smart deal for their customers.

QUEST: Steven Grundman, principal of Grundman Advisory, affiliated with the Atlantic Council, thank you for joining us tonight from Washington.

The IMF says it still believes that there are good reasons to give Greece more time to meet the conditions of its bailout plan. Any extension is dependent on the availability of financing and Greece has asked for another two years to meet targets.

Matthew Chance is in Athens for us tonight.

Matthew?

MATTHEW CHANCE, CNN CORRESPONDENT: Richard, thanks very much. That's right, and the IMF saying earlier today that they believe there are strong arguments for extending the timeframe for Greece to repay its debts and to receive those bailout funds, if the right funding's put in place.

It's something -- it's an argument that Greeks have been making in the thousands on the streets of the capital and other cities around the country, almost day in and day out. They started rounds of protests (inaudible) the summer has come to a conclusion.

Just today, we saw protests from groups as diverse as disabled people, mental health workers and employees of the finance ministry, the shipbuilding union staged a protests as well, all of them saying the same thing, which is they're having to endure too much austerity in this country.

I can tell you, Richard, a lot of them have a lot more to lose than from the further cuts that are coming in than just their pensions and their jobs.

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CHANCE (voice-over): For some Greeks, austerity is about life and death, literally.

(Inaudible) are protecting against health care reforms they say are cutting them off from expensive but life-saving drugs.

EVI GOLOZIDON, CANCER PATIENT ADVOCACY GROUP: Every day, I hear on the news that because of the new measures, they are going to cut funds to health, to national health. And that really, really frightens us.

Of course, I know Greece is (inaudible) now, but the problem is that we are going to die.

CHANCE (voice-over): At a makeshift clinic in Athens, volunteers offer hundreds of unemployed Greeks free medical care, even those with jobs come here, the head doctor tells me, to access medicines they can no longer afford.

CHANCE: And you say that a patient would need four or five of these for every four months?

UNIDENTIFIED MALE: For every four months, yes.

CHANCE: And each box, what, costs 486 euros?

UNIDENTIFIED MALE: Yes.

UNIDENTIFIED MALE (from captions): We believe at this moment hundreds of Greeks have died because they don't have health insurance, treatment, medical examinations or access to hospitals. Unfortunately, if these policies continue, we will be talking not about hundreds, but thousands.

UNIDENTIFIED MALE: (Speaking foreign language).

CHANCE: It's shocking, being confronted in this way by the human cost of Greece's economic crisis. The banners read things like, "Give us back our stolen dignity. Don't abandon us." But that's what many people here fear could happen. This Greece poised for a new round of austerity customer, this concerns that they could be abandoned in favor of cutbacks.

CHANCE (voice-over): But that's a concern the Greek health minister downplays. Even as another billion dollars, he says, is being cut from his budget.

CHANCE: There are many, many people outside with serious illnesses, like cancer, that say they simply cannot afford the essential drugs they need to stay alive. Do you intend to help these people in any way?

UNIDENTIFIED MALE (from captions): I don't believe there is a patient in Greece who cannot find the medication he or she needs.

CHANCE (voice-over): But there's no denying an increasing reliance on (inaudible) cuts have already left so many in despair.

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CHANCE: Well, that lack of access, Richard, to medical care in this country for the country's poor is something that (inaudible) organizations are extremely concerned about. They're saying (inaudible) this economic crisis is now threatening to become something of a public health crisis as well.

QUEST: Matthew Chance in Athens with that part of the story.

We thank you, Matthew, for that tonight.

And all this week we're breaking down the challenges which threaten the future of Europe. So if you join me at the superscreen, you can see that Greece very much does play one of those crucial roles. The goal for Greece is to avoid a default at all costs, even with two bailouts under its belt, it's still a serious risk at -- of default. And it's going back again to satisfy the troika conditions.

But what is really important is if you look here, and see not only how Greece relates to the three institutions, but also the other European countries. In each case, there are ramifications. Greece has to go to Germany to keep Merkel on board.

It's to Spain with Rajoy, to France for Hollande and to Italy for Monti. If there's one country that is really at the epicenter right now as the troika gives its latest report, it is Greece with this complicated report.

When we come back in just a moment, a check of the weather and the path of the tropical storm that's heading for Europe.

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QUEST (voice-over): Now the answer to tonight's "Currency Conundrum," the value of notes replaced every year by the U.S. Treasury free of charge is 30 million. Each year, the (inaudible) handles about 30,000 claims to replace mutilated currency.

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QUEST: Stocks from Wall Street now are higher. They're about 100 and something when we were with an hour ago. Have a look now what's happening over 200 points, a gain of 11/2 percent, and it's (inaudible) it's entirely, completely on the back of QE3 Twist and reinvest. An $85 billion-a month open-ended purchase plan by the U.S. -- by the U.S. central bank, the Fed.

JENNY HARRISON, CNN METEOROLOGIST: Yes, I think that's a fairly rhetorical question, really, isn't it? Yes, now, tell you what, talking about -- you mentioned the stormy weather (inaudible) because it is this storm system which was, of course, Leslie.

It's been working its way across the Atlantic, Greenland, Iceland and now the last few hours, it really has been having an impact already on the western regions of the U.K. to the north in particular. And it's not going to stop there.

It's going to head across northern Europe because the wind gusts in excess of 80 kmh, you can see all this cloud coming in. that is sort of the front edge of this storm system, some very heavy amounts of rain. It's moving fairly rapidly. The winds have actually died down, would you believe, in the last hour. So still gusty winds, but even so, not as strong as they were. And that is a system as it comes across.

So it's the next 24 hours, things are going to be very blustery indeed. You could expect to see some fairly lengthy travel delays at all those northern airports, those main airports, north Copenhagen, Dublin, even maybe down as far as London. And as I say, elsewhere, of course, you've also got some showers. And in fact, the worst rain is going to be across the central Med.

Again, this is because of this area of low pressure, some strong thunderstorms in there. And remember, we have that brief warmdown or cooloff, really, it's beginning to warm up again as we head towards the end of this week and into the weekend. But where that system is across the central Med, we could have some severe thunderstorms.

So there are some warnings in place, particularly western coast here of the Balkans. We could see some very strong winds and maybe even, of course, some of those isolated tornadoes. It's a very slow-moving system, but it is gradually working its way eastwards. And then to the north, all that rain that comes through the beginning of this particular period. That is the remnants of Leslie.

Once that clears through, it's not too bad at all. And the temperatures, they really do rebound. And in fact, look at that across the south (inaudible) temperatures actually warming up quite nicely. So 28 in Madrid on Friday, but probably through Saturday and Sunday, temperatures more likely to be in the low to mid-30s, 18 in London, 17 in Berlin.

But again it will actually warm up a couple of degrees in the next couple of days. Now Leslie was the storm system that began in the Atlantic. This is Nadine, another one, and this does look as if it should stay to the east of Bermuda and really, hopefully, just eventually kind of die out over the next few days.

But we'll keep an eye on it, because these storm systems, of course, do have a habit of doing things a little bit differently. And I just want to really to talk to you about this very briefly. This is a super typhoon, Samba.

Now this system is to the east of the Philippines, right now it is on track to head towards Okinawa and then either head to the west of Japan or push into the Korean peninsula, so another one, a very, very strong, a super typhoon. This is another one we'll be (inaudible) keeping an eye on very closely, Richard.

QUEST: You've got your work cut out for you over the next few days, Ms. Harrison --

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QUEST: You do indeed. Thank you very much and busy day's what we've had in the business world, too. QE3, $40 billion open-ended purchases by the U.S. Fed. And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest. Whatever you're up to in the hours ahead, I hope it's profitable.

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NINA DOS SANTOS, CNN HOST: Hello and welcome to Lake Como, Italy. This is MARKETPLACE EUROPE and I'm Nina dos Santos. Italy is still navigating the choppy economic waters of the Eurozone crisis. Manufacturing activity is continuing to contract.

And this nation as yet is no closer to emerging from its pronounced recession. As such, businesses across all of Europe are looking for new markets for their product in the hope of generating an export-led recovery.

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DOS SANTOS (voice-over): Coming up, how Scotland is benefiting from a boom in exports of its favorite tipple. And the CEO of Italy's biggest bank says (inaudible) will be stronger as a result of the crisis.

FEDERICO GHIZZONI, CEO, UNICREDIT: The crisis is a real great opportunity to change and to make the bank more efficient, more (inaudible) to customers.

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DOS SANTOS: (Inaudible) 16c and (inaudible) one of Italy's most aristocratic families. But these days, it attracts the business world's elite, who have been coming here for the past 40 years to discuss a prospect of the global economy.

And top of the agenda this year, of course, with the Eurozone crisis. And the herculean task of supporting countries (inaudible) single currency. But elsewhere in the Scottish Highlands, well, (inaudible) small businesses are looking to the emerging markets for their future. Jim Boulden went to Scotland's smallest distillery.

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JIM BOULDEN, CNN CORRESPONDENT: It's a crisp, cool, early morning near Pitlochry in the Scottish Highlands. Andrew Symington gears up for another day of whisky making at Edradour Distillery.

It's the mashing hour, where grains of malted barley are mixed with spring water at precisely 69 degrees Celsius. Together with yeast, these are the only ingredients in a bottle of single malt. The pricey end of Scotch whisky now in great demand in emerging markets.

ANDREW SYMINGTON, OWNER, EDRADOUR DISTILLERY: This is the last hand- made whisky in Scotland.

BOULDEN: What does handmade mean?

SYMINGTON: Well, we're using our hands, our eyes, our nose for smell, and even our ears sometimes as well (inaudible) whistles and the sills (ph) and things.

BOULDEN (voice-over): He's also proud of what hasn't changed at Edradour.

SYMINGTON: Some people always (inaudible), you know, but we'll be at the high end, the premium end of the markets.

BOULDEN (voice-over): And Edradour wants to keep its title as Scotland's smallest distillery.

BOULDEN: Edradour's fame stems from this, the smallest licensed still in Scotland.

BOULDEN (voice-over): Symington has no plans to add to the two copper stills, given they are a main attraction to the thousands of foreign tourists who flock by bus to Edradour.

SYMINGTON: We don't export large quantities so -- and we do get 65,000 visitors a year here. So from all around (inaudible), they're like 65,000 brand ambassadors. If they come here, like it, have a great experience, they go home and tell friends and it multiplies.

BOULDEN (voice-over): Drinks giants Diageo and Pernod Ricard have announced a massive increase in scotch whisky production, with exports rising for seven consecutive years, and a record $6 billion worth exported last year.

BOULDEN (voice-over): But scotch whisky has seen boom and bust before, with the rise and fall of economies like the United States and Japan.

DES MCCAGHERTY, WHISKY CONSULTANT, EDRADOUR DISTILLERY: In the mid- `70s, they were up to 200 million liters (inaudible) it's taken us 25 to 30 years to get back to that level of production on a consistent basis.

JAMES WITHERS, SCOTLAND FOOD & DRINK: Four on every five dollars in exports goes out into the drink terms (ph). It goes out in a whisky bottle just now. But what we're doing in Scotland is learning from what whisky has done.

They're around the table now with the seafood sector, salmon sector, red meat, bakery. We're learning from how they built brands so we can develop a global footprint for food and drink as a whole, not just whisky.

SYMINGTON: Since 2008, Spain and Portugal have been (inaudible) and Italy to a certain extent, too. Sales to these countries have dropped by nearly 50 percent. But it's been taken up by Russia, by China, by Brazil (inaudible) many new emerging markets.

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BOULDEN (voice-over): Emerging markets that Symington says will be interested in his older caskets. This one has sat for 41 years. In nine years' time, he hopes to get more than 1,300 bottle of 50-year-old malt whisky out of three caskets at up to $8,000 a bottle.

SYMINGTON: It's the one big thing about whisky. It takes time -- patience and time.

BOULDEN (voice-over): With more markets thirsty for Scottish single malts, it should be time well spent.

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DOS SANTOS: Jim Boulden there with a taste of the export market in Scotland.

After the break, the CEO of UniCredit.

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DOS SANTOS: Hello and welcome back to MARKETPLACE EUROPE. Here from the shores of Lake Como in Italy, well, delegates to the annual Ambrosetti Forum have been discussing the prospects for the Eurozone and one issue that came up repeatedly was how to plan ahead during such times of uncertainty.

UniCredit is Italy's largest bank. Based in Milan, it has an international presence in 50 markets. But there are 9,400 branches; the group employs over 150,000 people. UniCredit posted an operating profit of $7.2 billion for the first half of 2012.

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GHIZZONI: Everybody realized that we need a stronger Europe and a more integrated Europe. So now it's time to go for implementation of the (inaudible) measures that started from what has been decided (inaudible) at the end of June. We take some time. We know that Europe is not fast.

But the process is there and with respect to also as a banker of a bank (inaudible) countries (inaudible) UniCredit is good news. But for us, it's good news because we have (inaudible) European bank (inaudible) presence in Europe very large (inaudible) countries.

For us has been really a seriousness problem to manage a company working in a country with so different situation. Take, for example, the cost of funding, completely different for us if we borrow Germany (inaudible) Italy or Poland. So is a politic friend (ph) from the point of view of UniCredit and I'm quite optimistic it will come (inaudible).

DOS SANTOS: So you welcome the banking union?

GHIZZONI: Absolutely, yes. (Inaudible) important step forward. I think, though, try to start eliminate imbalances inside Europe, especially in terms of spread so the (inaudible) banks from (inaudible) is important and (inaudible) very favor to have added the European banking union apply to all banks, not just (inaudible).

DOS SANTOS: How difficult is it to be at the helm of an Italian bank when obviously the Italian sovereign is one of those bonds that people are so worried about? And also an Italian bank that's listed on the stock exchange as well, because you hold Italian bonds in your accounts. You're an Italian bank. But you're also exposed to the sovereign exposure and the stock market jitters.

GHIZZONI: Well, yes, if you look the stock exchange or this kind of stuff, that's not been easy. But (inaudible) remember that (inaudible) UniCredit is not just an old Italian bank, only 38 percent of our assets are based in Italy. The rest is outside Italy.

We have 27 percent of our assets in Germany, for example. The crisis is a real creative opportunity to change and to make the bank more efficient, more close to customers. And these days we can do things that it was not easy to do a couple of years ago, one year ago. So the (inaudible) is pushing everybody to realize it was time to make change.

And I'm quite assured that when the crisis will be over, because (inaudible) think it will be over, UniCredit will be stronger than what it was before the crisis.

DOS SANTOS: (Inaudible) the CEO (inaudible) notoriously difficult time after upheaval in the board room, with your predecessor leaving two years after the credit crunch, just in the middle of the Eurozone crisis. How are you going to steady the ship?

GHIZZONI: If I look the bank from capital point of view, we're OK. But more important for me, we are definitely OK from a liquidity point of view. I can say that today the bank is pretty long in terms of liquidity. Thanks also to very good relationship established with customers our deposit keeps growing.

DOS SANTOS: Where do you see the business climate going for Europe in the next five years?

GHIZZONI: To say what will be Europe in five years is not easy. But we see a stronger, more integrated Europe. And I think also it is back in the game in the concept of Europe is my prediction.

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DOS SANTOS: Domenico Ghizzoni there, the CEO of UniCredit, bringing this week's MARKETPLACE EUROPE to a close. Join us next week when Richard Quest will be speaking with the man at the sharp end of the Swiss company Victorinox, the makers of the original Swiss Army knife. But in the meantime, from Lake Como, Italy, it's goodbye for me. Thanks for watching.